In relation to the issue of indefeasibility of title and interest, it should be noted that there are two types of indefeasibility namely immediate and deferred indefeasibility. Chief Judge of Malaya Arifin Zakaria in the case of Tan Yin Hong v Tan Sian Sa

The definition of indefeasibility and the distinction between the two types of indefeasibility namely immediate and deferred indefeasibility is considered settle at this point. Next, we will take a look at application of the provision which concern on the issue of indefeasibility which is section 340 of the National Land Code 1965. The provision reads:

        

“340. Registration to confer indefeasible title or interest, except in

certain circumstances.

(1)         The title or interest of any person or body for the time being

registered as proprietor of any land, or in whose name any lease,

charge or easement is for the time being registered, shall, subject

                to the following provisions of this section, be indefeasible.

(2)         The title or interest of any such person or body shall not be

indefeasible-

1.  in any case of fraud or misrepresentation to which the

person or body, or any agent of the person or body, was a

party or privy; or

2.  where registration was obtained by forgery, or by means of

an insufficient or void instrument; or

3.  where the title or interest was unlawfully acquired by the

person or body in the purported exercise of any power or

authority conferred by any written law.

(3)         Where the title or interest of any person or body is defeasible by

reason of any of the circumstances specified in sub-s.(2) –

1.  it shall be liable to be set aside in the hands of any person

or body to whom it may subsequently be transferred; and

2.  any interest subsequently granted thereout shall be liable

to be set aside in the hands of any person or body in whom it

is for the time being vested.

Provided that nothing in this subsection shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such a purchaser.”

Chief Judge of Malaya Ariffin Zakaria in Tan Yin Hong v Tan Sian San [2010] 2 CLJ 269 had explained upon delivering the judgment of the case and stated that it is common ground that the chargee, in whose favour the charges were registered, is an immediate holder of the interest on the land. By virtue of this view, we would like to argue that since the respondent had purchased the land through an auction, this has vested him with deferred indefeasibility. Deferred indefeasibility as explained earlier will give immunity to the respondent from any adverse claim.

To clarify my argument, allow me to observed section 340 of the National Land Code 1965 in details. In Au Meng Nam & Anor v Ung Yak Chew [2007] 4 CLJ 526, Justice Raus Sharif in discussing on the proviso of section 340(3) of the National Land Code 1965 said:

“To me, by virtue of s.340(2)(b) of the Code, the title of Adorna Properties was not indefeasible as the registration was obtained by forgery. S.340(3) does not apply to s.340(2). The proviso states "Provided that in this sub-section" and this sub-section refers to s.340(3) and not s.340(2). S.340(3)(a) refers to "to whom it may subsequently be transferred" which means that the intended purchaser is the subsequent purchaser and not the immediate purchaser.”

In Adorna Properties Sdn Bhd v Boonsom Boonyanit [2001] 2 CLJ 133, Federal Court in this case had applied the proviso of section 340(3) of the National Land Code with section 340(2) and come to the conclusion that any purchaser in good faith for valuable consideration is excluded from the application of the provision and thus giving this category of proprietor an immediate indefeasible title despite the court’s finding that the instrument of transfer was forged. However in Tan Yin Hong v Tan Sian San [2010] 2 CLJ 269, the court stated that sub-section 3 of section 340 did not apply to sub-section 2. The proviso states “Provided that in this sub-section” and this sub-section refers to section 340(3) only. Section 340(3)(a) refers to “to whom it may subsequently be transferred” which means that the intended purchaser is the subsequent purchaser and not the immediate purchaser.  

It can be concluded that the argument submitted by the learned judge indicate that the proviso of section 340(3) which provide that any title or interest acquired by any purchaser in good faith and for valuable consideration acquired through subsequent transfer from immediate holder will render such purchaser to be vested with deferred indefeasibility. In other words, he is fully protected and can use the advantage provided under the proviso of section 340(3) to exclude liability and retain his title as bona fide purchaser.

Submission

It is respectfully submitted that it is crystal clear now that the transaction between the appellant and the respondent is indeed a valid one. The provision of the law and principle derived from decided cases clearly indicate through the transaction made between the two parties had vested the respondent with deferred indefeasibility of title and therefore he is protected by the law as he is a bona fide purchaser. The respondent action defaulting in payment of the purchase land and instead claiming for the repayment of the part payment made concerning the purchase land should amount to breach of contract.

Since there is registered charged as has been proved in the argument given, by virtue of section 218(2) of the National Land Code 1965, therefore the transaction between the appellant and the respondent is governed by the proviso of section 340(3) of the National Land Code 1965.    

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